Associate Finance Minister David Seymour on Sunday announced plans to reform the Overseas Investment Act. Photo: RNZ / REECE BAKER
A business advocacy group says planned changes to the Overseas Investment Act will bring much-needed capital to the country.
The government's changes will include making decisions on foreign investment within 15 days, unless they relate to residential or farm land and fishing quota.
Associate Finance Minister David Seymour on Sunday said that the reforms would improve economic growth with foreign investment providing better tools and technologies, making workers more productive and improving pay rates.
BusinessNZ director of advocacy Catherine Beard said the organisation had been calling for a more encouraging business regime for many years.
"New Zealand's one of the hardest places to invest in the OECD and I guess a lot of that has centred around sensitivity over land.
"So the definition in the Act of sensitive land is anything over five hectares which is actually a pretty small footprint."
That meant that New Zealand looked "quite opaque and difficult" to international investors, she said.
"The investment into the OECD generally from foreign money has been trending up over the years but if you look at the graph for New Zealand it's flat line, so we're missing out on a lot of capital and we're quite a capital-shallow economy."
BusinessNZ believed the changes would be positive and lead to more money coming into the country, she said.
It could boost jobs and the jobs tended to be higher paid, she said.
"Most of our big frontier firms have foreign investors sitting behind them, they don't just put money into plant and equipment and technology but they are also often a bridge into that international market to sell into."
Asked whether the proposed changes would mean more infrastructure would be foreign-owned and whether that was an issue, Beard said ports that had outside investment rather than being council-owned did much better.
"Port of Tauranga is a great example of that, it outperforms most of the rest of the ports, so nothing to be concerned about, if councils own some of those assets they don't need to sell 100 percent of them, they can keep a controlling ownership."
A lack of outside investment was part of the reason that New Zealand was "a low productivity and a low wage country", she said.
Beard said the issues were things like whether a port could take big ships, expand, employ people and pay high wages rather than whether it was foreign-owned.
"All of those people will pay tax in New Zealand and when I look at our top companies most of them would have foreign investment."
Beard said she did not agree with farm land being exempted from the proposed 15 day foreign investment decision-making saying it was a little "paranoid" given farm land could not be taken out of the country and it would not be in a foreign owner's interest for it not to be profitable.
"Probably a bit too much paranoia around that, but you know there are safeguards in there so if that's what's politically acceptable to free up other parts of the economy for investment then I guess that's the way it's going to go."
Labour says proposed changes 'reckless'
Labour says the government's overhaul of the Overseas Investment Act is a reckless fast-track for foreign investment at the expense of New Zealand interests.
Currently the Overseas Investment Act states it is a privilege to control or own sensitive New Zealand assets.
Labour finance spokesperson Barbara Edmonds said the government intended to change that premise to make it more risk-based or permissive.
"The new starting point is that investment can proceed unless there is an identified risk to New Zealand's interests - that's a huge shift from the way the regime currently works."
The new application review process would remove current protections particularly for those assets which needed to go through a full national impact assessments, she said.
Edmonds agreed that overseas investment was beneficial to New Zealand but said safeguards needed to be in place.
The minister's paper did not mention dedicating further resources and applying more scrutiny "particularly in terms of economic benefits and security risks to foreign investment proposals," she said.
The minister's paper did not mention any way to enforce compliance to ensure any overseas investment conditions were met, she said.
"It's [the paper] quite light on the detail, there's no draft legislation that's been released for us to scrutinise."
There was no guarantee that the new proposals would lead to more jobs and investment, she said.
Read the Cabinet paper here:
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